"After extensive investigation we switched our entire GLD exchange-traded fund position into physical gold," Einhorn wrote in a note to investors.

"At a minimum this will provide some savings as the costs of storing gold are less than the fees on GLD."

Market analysts say Einhorn the move could save Einhorn as much as $750,000 a year in fees.

Einhorn’s fellow hedge fund manager John Paulson is still holding gold shares: As of the end of the first quarter, Paulson’s fund was the largest holder of SPDR Gold Trust, an investment fund that buys gold bullion, Bloomberg reports, holding 8.7 percent of the fund, valued at $2.8 billion.

“It does make a lot of sense to put about 5 percent of your investment portfolio into a tangible form of gold right now,” says Forbes columnist Jan Alexander.

Gold, Alexander notes, tends to increase in value when the U.S. dollar declines against other currencies and when the economy experiences high inflation — two trends she says are highly likely to occur in the next two to three years.

Gold has shot up over 225 percent since a dip to $278 in 2001 but is down from its March high of $1,033.